Selling is never easy. Much as investors love profits and die to make more of it, when it comes to taking it, they hate to press the exit button. The overwhelming emotion when the finger heads towards the exit button is fear.
“What if you miss out on more profits? Would it not be a tragedy to exit early?” Doubt stops the right actions. Most investors who are overwhelmed by fear never sell. On the contrary, they buy heavily at market tops. And, when the markets correct sharply, they panic. Sounds familiar, right?
So what is it that can counter the new-high headlines screaming at you from the pink papers? Or the party buzz that is all around you. Or, the fear of missing out. There is only one thing that saves the day if you really want to save it for yourself. Contentment.
If you know things are really much better than you expected and everybody else thinks there is more to come, you need to just listen to yourself. Cut the noise out and take a few simple clear sell decisions. Then, execute them and walk away from the crowd. Don’t bother what happens for a few weeks. Or, even for months if you need to.
But remember that you were in the minority that took profits. The majority in the Indian stock market merely watch profits get created and destroyed. You are in the minority that redeemed.
“Most people are driven by greed, fear, envy, and other emotions that render objectivity impossible and open the door for significant mistakes.”– Howard Marks